Upper S equals $20$ plus $20$ Upper PS$=20+20$P

and

Upper D equals $100$ minus $20$ Upper PD$=10020$P

are$$Home$\text{'}$s supply and demand curves for wheat.

Upper S Superscript star Baseline equals $40$ plus $20$ Upper PS$*=40+20$P

and

Upper D Superscript star Baseline equals $80$ minus $20$ Upper PD$*=8020$P

are$$Foreign$\text{'}$s supply and demand curves for wheat.

Part $2$

With free trade the price of wheat is

$$$$1\mathrm{.}501\mathrm{.}50.$

$($Enter

your response rounded to the nearest

penny$.)$

Part $3$

Suppose home imposes a specific tariff of$$$$0\mathrm{.}50$ on wheat. Home consumers will now pay

$$$$1\mathrm{.}751\mathrm{.}75$

and$$foreign$\text{'}$s export price is

$$$$1\mathrm{.}251\mathrm{.}25.$

$($Round your responses rounded to the nearest

penny.$)$

Part $4$

Now assume that foreign is a much larger country. $$Specifically$,$ Foreign's demand curve for wheat is

Upper D Superscript star Baseline equals $800$ minus $200$ Upper PD$*=800200$P$.$

Its supply curve is

Upper S Superscript star Baseline equals $400$ plus $200$ Upper PS$*=400+200$P$.$

Part $5$

With free trade the price of wheat is

$$$$1\mathrm{.}091\mathrm{.}09.$

$($Round your response rounded to the nearest

penny.$)$

Part $6$

Suppose Home imposes a specific tariff of$$$$0\mathrm{.}50$ on wheat. Home consumers will now pay

$$$enter your response here

and$$foreign$\text{'}$s export price is

$$$enter your response here.

$($Round your response rounded to the nearest

penny.$)$